Achieving corporate success

Table of contents Page no Part A Starbucks company overview Taxation policy Future prospects External audit Brand image of Starbucks Part B Market segmentation Part C PEST analysis Joint-venture of Starbucks with Tata 7 8 6 3 3 4 4 5

Part D 7ps of Marketing mix 9

Reference

11

To: Starbucks From: Retail marketing consultant Subject: The Brand management of Starbucks Date: 26.07.2013 Part A Starbucks company overview: Starbucks is the leading brand name in global coffee market. The company was established during the year 1917 in USA. The company has made significant contribution towards the growth and expansion of international coffee chain. At present in competitive coffee market as a part of its marketing policy Starbucks takes into account the market segments along with the buying behavoiur of the existing and potential customers based on the global trends. The company is headquartered in Seattle, Washington, USA. At present the company has expanded its market through 17,000 outlets in 49 countries. Starbucks has initiated significant strategy policies which has enhanced the company to expand its business in an international context(Starbucks,2013). Taxation policy: During the expansion and growth of coffee market it is observed that there is high taxation imposed on the farmers producing coffee beans. In this stage it is observed that Starbucks is paying higher price for the coffee due to the taxation policy. It results in the pricing policy of Starbucks. Therefore it is important for the management to consider the macro environment and policies which has significant influence during the international trade.

Future prospects: The future prospects of Starbucks reflects better control over the operational cost well as diversify the portfolio of the business. At present due to the financial
3

downturn it is observed that the expansion policies of Starbucks is quite slow. The company is adopting cost-cutting policy to enquiries the profitability in the short run. According to the researchers it is observed that the company is rethinking its for in the market entry strategy for the near future due to its pricing policies. In addition to there are external risk that results in from the volatile political and business issues during the foreign market expansion. Therefore finally it can be observed that the company's future plan is to operate the business in a cost-effective manner that will enhance the company to serve the customers low cost coffee drink income present with the other competitors. External audit: The external audit plays a significant role for Starbucks to focus upon the current market position as well as the future expansion policies. In addition to make the marketing plan successful during the global expansion it is important for Starbucks to focus upon the current economic climate in which the business will take place. The external audit for Starbucks can be conducted by following the concept of porters Diamond model(Bogomolova,et al,2006). Porters Diamond model: porters Diamond model reflects for prime stages through which the business can be operated in local and global scale during the expansion stage. Factor condition: in order to compete with the competitors and to strengthen in the competitive policy in the market it is essential for Starbucks to focus upon the human resource management as will as the available resources required to make the products available for sale towards the customers. Demand conditions: In this stage it is observed that Starbucks needs to provide emphasis more on its local outlets rather than theforeign in market. It will ennoble the company to make its current market position more stable and competitive if the product has larger and more demanding market at home country. FIrms strategy, structure and rivalry: In order to focus upon the competitiveness of Starbucks it is important to take into account the management structure operational activities and the overall system based on the country of operation. In addition to the
4

foreign market expansion the country needs to be more productive in order to enter and expand the foreign market. Brand image of Starbucks: The prime objective of Starbucks is to develop positive relationship with the customers/customer relationship management. It enhances the company to establish a reported brand image. The brand image with enhanced the company to create more customers through the positive word of mouth of the existing customers. Starbucks is continuously striving to improve its service quality that has a number of the company to gain the leading position in the coffee industries in local and global context. In context of Starbucks branding office important advantageous that includes legal protection of the product composition and the related features in order to avoid the risk of copying. Moreover branding also enhances the wireless keypad tones of the products of Starbucks that enables the company to maximise the profit. In addition to create unique identity in the marketplace branding is the process of attracting new customers. It also enhances Starbucks to manage its inventory in an efficient manner to balance between the demand and supply. Finally during the market segmentation process branding focuses upon the overall process by taking into account the distinctive product offerings designed to satisfy the specific needs of individual customers. In context of the customers brand image offers with the reassurance of quality products in which the customer can depend on. In addition to the perception of beliefs of the customers are strongly influenced by the brand image of Starbucks as it focuses upon the consistency of the product. In order to identify the product branding enhances the customer to establish positive relationship with Starbucks.

Part B
5

Market segmentation: According to Kotler(2006 )the market segmentation is considered to be an important strategy tool for Starbucks towards the growth and expansion of the business leading towards profit maximisation. It also enhances the company to target and identify the customers with their specific needs. In order to add just the marketing mix perfectly and to allocate the resources in an efficient manner it is essential to focus upon the market segmentation. In addition to several the products in comparison with the other competitors in a competitive rate Starbucks has developed it combines strategy to break down their own market. The Starbucks coffee company mainly uses demographic and psycho-graphic segmentation during the market expansion. The target group of customers of Starbucks are mainly really educated men and woman with children in the age group of 40. In order to deal with the ideal segment of Starbucks the coffee houses creates a mature and highly prestigious brand image which offers forts and beverages to the target group of customers based on the market segment. According to the statistical review and the market analysis it is observed that the main segment represents Mormon in the age of 18 to 35, 33 %of them are college graduates, 42% of them have children, and 54% of them are married (Kolk,2005). On the other hand while considering the phycho graphical canisters take it is observed that prime customers of Starbucks on the college graduates with high income who are interested in sharing in neighbourhood and to socialise themselves. In order to reach everyone in the community it is essential for Starbucks to relocate in retail stores in central sports of neighbourhood which can be the train stations and the busy shopping centres. In addition to Starbucks also focuses upon gourmet coffee drinker as one of its important market segment.

Part C PEST analysis: Political:

6

Government

stability: During the market expansion policy Starbucks should take

into account the political stability in context of foreign market entry mode in general. In addition to the changes in taxation and legislation policy has significant impact on towards the market expansion and growth of Starbucks. International stability: The international economy has significant contribution towards the sales and market expansion of Starbucks. During the period of recession it is observed that the market expansion of Starbucks will be comparatively slow. Employment law: it is important for Starbucks to focus upon the employment laws and regulations in order to create a better working environment for the workforce. In addition to the reduction in licensing and by meet cost will make possible for the farmers to reduce the production cost of coffee beans in context of Starbucks. Economic: The interest rates is considered to be one of the significant determinant of towards the market expansion and growth of Starbucks. The interest rate has significant influence towards the customers buying behaviour and disposable income to spend on luxury products and drinks. Competitors pricing policy: The competitors pricing policies has significant impact towards the increase in Starbucks market share. Exchange rates: The exchange rate and its fluctuation has significant influence during the international market expansion of Starbucks. Therefore it is essential for the company to take into account the inflation rates towards the profit maximisation and to expand the market in global context. Social: Demographics: it is important for Starbucks to focus upon the demographic characteristics of the target group of customers. It will enhance the company to identify the customer range and to take the necessary marketing initiative for their products. At present the customer range of Starbucks are mostly that youngsters between the age group of 18 to 24. Therefore Starbucks needs to focus upon the customers based on their demographic statistics.
7

Employment opportunity: Starbucks is a leading brand name of coffee in local and global context. The company should initiate significant employment policies that may contribute towards the social responsibilities(Kolk,2005). Location: during the establishment of outlets it is essential for Starbucks to consider the customer group their easy access towards the coffee shop. In most of the cases Starbucks aim to establish its outlets near the busy shopping malls. Technology: At present the advancement of information technology has made possible for the company to create new customer and to retain the existing customers by serving them with the required blended coffee (Bogomolova,et al,2006). In this stage it is also mentioned that social media, Facebook and Twitter and the modern contribution of information technology that has ennoble Starbucks to establish favourable relationship and to keep close with its potential and existing customers. Joint-venture of Starbucks with Tata: At present as a part of four in market entry mode in a India Starbucks has established joint-venture meet Tata coffee and established Tata Starbucks limited during the year 2012. Tata global beverage is one of the second-largest the company in India. Tata coffee is the subsidy of that the global beverage. It has one of the largest coffee plantation company and the second largest exporter of instant coffee in context of India. The prime product range of the joint-venture company will be featured on espresso that is sourced and roasted locally from India through the coffee sourcing and roasting agreement with that the coffee limited. In addition to the espresso sourced from India will be a hallmark feature of all Starbucks stores in the market. It will highlight the quality espresso available in India. Therefore the prime objective of the joint-venture is to expand the market of Starbucks in India by creating a reported brand image and customer loyalty. Part D 7ps of Marketing mix: Product: Starbucks coffee company has its own traditional brand name an taste in context of its quality coffee products. The company offers large range of products for
8

its existing and potential customer group in a reasonable price. The company is striving for excellence in order to create competitive market and to remain in the leading position in the coffee market of UK. At present besides its normal product ranges the company is also aiming to diversify its portfolio in fast food sector. Price: the pricing policy is considered to be an important determinant of marketing mix. In order to identifying the buying behaviour and the buying capacity of the customers during the market expansion of growth it is essential to focus upon the rise. At present the company's target group of customers aren't the age range between 18 to 24 years. Therefore to attract the age group of customers and to focus upon the buying capacity it is significant for Starbucks to offer quality coffee in a reasonable price. During the customer survey revealed in statistical data analysis papers is that most of the customers of style works us that youngsters with limited budget for the cup of coffee. Therefore the company may still take into account the cost-effective strategy for the existing and potential customer group (Bremner, 2005). Promotions: At present the UK coffee market is competitive. In this stage to remain in the leading position and to compete with the other key market players such as the Costa coffee, Caffe Nero and Eat it is important to focus upon the promotional campaign of its product range. The social media, Facebook and Twitter are the modern contribution of information technology that enhances the company to bridge the gap between the potential and existing customers in order to promote the product range of Starbucks. People: training and development process are the prime concept to get the best possible outcome from the people in Starbucks. In addition to the motivation policy initiated by Starbucks creates better working environment for the people in the workplace. It results in better service quality and customer satisfaction in Starbucks Process : process is one of the significant determinants of marketing mix. It enables the company to focus upon the overall marketing process towards the expansion and growth of Starbucks in competitive of industries. Physical evidence: the physical evidence of Starbucks is based on its reported brand image. In addition to the court overtakes and the presentation policies of the company's products towards the existing and potential customer group are
9

considered to be the significant determinants of the physical evidence that enhances the company to remain competitive in the coffee market.

Reference

10

Bogomolova, S., Romaniuk, J. & Sharp, A. (2009) Quantifying the extent of temporal decayin service quality ratings. International Journal of Market Research, 51, 1, pp. 7191. Bremner C., (2005), Coffee Shops in the UK, [online], Euromonitor International, Available from : < http://www.euromonitor.com/Coffee_Shops_in_the_UK> [Accessed 25th July, 2013] Kolk A., (2005) Corporate Social Responsibility in the Coffee Sector: The Dynamics of MNC Responses and Code Development European Management Journal, 23:2. Kotler P. and Keller K.L., (2006) Marketing Management, 12th Edition, Upper Saddle River, NJ : Pearson Prentice Hall.

Lee and Gmez1 (2011), Impacts of the End of the Coffee Export Quota System on International-to-Retail Price Transmission, Working Paper, Dyson School of Applied Economics and Management Cornell University, Ithaca, New York, USA

Starbucks(2013),Available at :http://starbucks.co.uk/[Accessed 23 th July, 2013]

11